India has added yet another feather to its cap. Apart from being the fastest growing economy and a sea of calm in the middle of a global storm, World Bank Group chief Jim Yong Kim recognised the way India handled the fallout of the economic chaos created by Britain voting to leave the European Union. India remained unaffected, though engineering exports could take a hit, but it might only be a minor blip. Exports have been down for a few months and will continue to be so until the global economies pick up. An even more interesting development is the World Bank throwing its financial weight behind India’s renewable energy programme, particularly Prime Minister Narendra Modi’s ambitious solar energy plan.
Interestingly, Mr Modi has taken the lead globally for the solar alliance project and this will have a far-reaching effect that will extend even to the Indian economy. For one, it will bring down the cost of solar energy and reduce the time for putting up solar panels. One wonders why earlier governments did not push this with the required zeal. India is among the few countries that get sunshine almost 330 days in a year; it doesn’t make sense to ignore such an abundant natural resource, especially when the country suffers from chronic power shortages. The high cost of solar power was cited as an excuse.
In fact, when Mr Modi announced the target for solar energy, it immediately brought down the price of solar energy and costs are expected to go down further. The states have now to cooperate with the Centre to meet the target as they will have to provide incentives to entrepreneurs to put up rooftop solar panels. They have to match the crusading energy of Mr Modi and that is yet to be seen, even in BJP-ruled states. This is the only way the target can be met.
A word of caution will not be out of place amidst the well-deserved praise showered on Mr Modi and his steering of the economy onto the path of high growth. Even as Dr Kim lauded India as the one “bright spot” in the world, the commerce ministry put out figures that showed that production in core sector industries like cement and steel had slipped to a five-month low in May. Monthly figures vary. In June, for instance, manufacturing has picked up. It is, however, necessary to keep track and take steps to arrest slippage. One major issue that looks intractable is private investment and the government has yet to find a way out.
